OnLive has, for all intents and purposes, died. "We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding," a company spokesperson told VentureBeat. Although the company is being restructured, the OnLive service will continue. "There is no expected interruption of any OnLive services," the statement points out.

According to the representative, "the new company is hiring a large percentage of OnLive Inc's staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees." Earlier reports indicated that the entire staff had been laid off.

Explaining the company's silence on the matter, the rep said that "we were unable to comment on this transaction until it completed, and were limited to reporting on news related to OnLive's businesses."

Original story follows.

Former employees of OnLive are claiming the imminent demise of the company. InXile Entertainment's Brian Fargo has posted a forwarded email from a now-former employee of the company, saying that by day's end "OnLive as an entity will no longer exist." It appears everyone at the company has been laid off. Gamasutra report concurs. According to statements posted on Facebook, "a new company will be formed" that will coordinate "current initiatives in place."

However, OnLive representatives claim that the service is not shutting down, in spite whatever may be happening at the company.

Sources close to Mashable report that the entire OnLive staff was fired at an all-hands meeting that took place at 10AM PT. The report also claims that "some staffers may be rehired as the company transitions to its next unknown iteration." Kotaku also received the same information, adding that the company plans on filing for bankruptcy later today.

OnLive offered streaming games that could run on a variety of devices, including PC, Mac, and Android. The company most recently announced a partnership with Ouya to bring their services to the Android-based device. OnLive also offered its own standalone TV-connected console.

Speaking to Shacknews, an OnLive representative said that "we don't respond to rumors and have no comment." The service will remain open, but there's still no word on the extent of layoffs. Analyst Michael Pachter tweeted that financing is "not an issue" at OnLive, so "it must be a changed strategy to an all IP model."

New reports from Engadget and GamePolitics suggest that the company is laying off at least 50 percent of its employees, and that a new company is buying OnLive. Apparently, the company has faced severe financial difficulties as of late, contradicting Pachter's claims. Shacknews will continue to update this story as new developments arise.